[The first speaker is Nita Zodgekar, manager of International Labour Policy team at the Ministry of Business, Innovation and Employment]
Nita: Tena koutou katoa, a very warm welcome to you all to our webinar on the government's proposal for modern slavery legislation. My name is Nita Zodgekar and I head up the International Labor Policy Team here at MBIE, who have been responsible for leading the policy advice on this issue to government. I'll open with our MBIE karakia.
[slideshow showing MBIE Karakia]
Tāwhia tō mana kia mau, kia māia Ka huri taku aro ki te pae kahurangi, kei reira te oranga mōku Mā mahi tahi, ka ora, ka puāwai Ā mātau mahi katoa, ka pono, ka tika TIHEI MAURI ORA.
There are a lot of people online today and it's great to have you all with us. A special welcome to our Chair of the modern slavery leadership advisory group, Rob Fyfe, who I will introduce to you in a moment. We also have Paramita Turner, and Shay Duckworth from my team, who have been leading the policy advice on this issue. Jonathan To, has also joined us from the employment systems and assurance policy team. The purpose of our webinar today is to build our understanding of the proposals that are outlined in the consultation document, and it's also to promote the opportunity to provide feedback on those proposals. The government's proposal has been described and has currently been described quite widely as transformative and ambitious. Firstly, it proposes legislation that goes beyond disclosure, and thinking more about due diligence and what a business is doing to address modern slavery and their supply chains. It requires all organisations to join the effort. Secondly, it puts in place new and positively focused responsibilities, and helping support organisations to take that positive action and drive a culture of responsible business practice. We'll explore the proposal in detail soon. We have allowed time for your questions, and you can post them in the q&a box. If we don't get through all of your questions, the team will endeavor to answer those questions afterwards and get those answers to you. Now, I'm delighted to say that Rob Fyfe is able to join us he's beaming in from Toronto, I understand. And many of you will know Rob, as a prominent business leader and former CEO of Air New Zealand. As I mentioned earlier, Rob Fyfe is the chair of the modern slavery leadership advisory group, which brings together a small group of senior leaders with expertise on modern slavery across NGOs, business unions, and, of course, academia. My team and I have had the privilege of working with Rob in very close consultation with the group. And they have contributed quite significantly to the policy advice that we provided to the government. So I'll hand over to you Rob, the screen is all yours.
[The next speaker is Rob Fyfe, New Zealand businessperson and former CE of Air NZ]
Rob Fyfe: Thanks Nita and Kia Ora everyone. I thought I'd take the opportunity just to share a little of my journey and passion for this topic. It grew during my time at Air New Zealand, but probably really crystallized when I became chairman of icebreaker, the merino wool clothing company. And when I joined that company, I spent a lot of time looking at the essence of our proposition to, to our consumers in the transparency throughout our business model, starting with the welfare of the sheep, where the wool came from all the way through to the welfare of people working throughout our supply chains. And in that process, I spent a lot of time, we manufactured a lot of our garments up in Asia, and I spent a lot of time up in Asia. And what I discovered I found really intriguing, people warned me off saying you know, you don't want to do business in places like Bangladesh and so on, you better to focus on Italy or USA or whatever. I very quickly discovered that it doesn't matter what country you're in, you can find some of the best factories in the world and some of the worst factories in the world in terms of how they treat the workers in those factories. And we discovered that, and I genuinely believe that if we make the effort as businesses to focus on supporting those suppliers, those businesses that have good or excellent work practices, and we boycott or avoid those businesses that have poor work practices, we can have an influence in the working conditions across a wider sector within a community and in a country. And when I look at some of the things I saw, and particularly the depravations I saw are in some of those countries and the conditions people were expected to work in, it really galvanized me firstly at icebreaker to want to do a lot better in terms of weeding out any mistreatment, any evidence of modern slavery and exploitation in our supply chains. But then it also motivated me to look and say we should be doing much more as a country. And I guess, to some degree, I felt disheartened initially, when I looked at what we were doing, and then in New Zealand, and saw us slipping behind many other countries in the world in terms of proactively advocating for legislation and consequences for businesses that aren't taking a positive and affirmative action in this space. The proposal that the MBIE team have come up with, it's gone out for consultation, isn't just about catching up to the rest of the world. What the leadership advisory group really impressed upon the MBIE team, and we're very much in lockstep on this was, we wanted to come up with a proposal that took us to a world leading position, learnt from what is working in other jurisdictions, and figuring out how we can build on that to create a legislative solution that had more teeth, without necessarily creating greater impost on business in terms of compliance, cost and time. So that's the objective here, I think what's being proposed has the potential to be to be incredibly valuable to New Zealand businesses, to our reputations, and has the potential to make a real difference for people that are exposed to exploitation and the supply chains in the countries that we source goods and services with. So I look forward to the consultation process, we're really confident that we'll get some great feedback out of this and all helped to refine and enhance the final form of any legislation that goes before Government. So I'm looking forward to this session and feedback over the next few weeks. Thank you.
[The first speaker is Nita Zodgekar, manager of International Labour Policy team at the Ministry of Business, Innovation and Employment]
Nita: Thank you, Rob, for the excellent overview of the importance of this work. And it was great to get your insight into your time at icebreaker and some of that firsthand experience of walking the talk on helping address issues of modern slavery from a business perspective. Now, let me pass you on to Paramita Turner, Shay Duckworth and John To who will take you through the proposals in some detail.
[The next speaker is Shay Duckworth, Policy Advisor at Ministry of Business, Innovation and Employment. A slideshow with the opening title ‘A legislative response to modern slavery and worker exploitation is showing]
Shay: Kia Ora koutou and thank you for joining us today to talk about this really important proposal. Paramita, John and I will outline the details of the proposal, what we want to hear more about from you, and how best to have your say.
[slide changes to show bullet point list of ‘overviews’]
So the issue that this proposal is seeking to address is that while some New Zealand organisations are taking action, modern slavery and exploitation are still significant problems in our supply chains and operations. We've heard from more New Zealanders who want legislation to address modern slavery. The government has put together a proposal that draws on best practice and international experience. And we want to hear about how that proposal can be best shaped to work for New Zealand.
[slide changes to show statistics, outlining the number of people calling for change]
The Minister for Workplace Relations and Safety has received a letter signed by over 100 businesses, and a public petition signed by more than 37,000 people calling on the government to take action now. There is growing pressure from consumers, businesses, civil society and other international partners to do more. We've heard from a survey that 50% of New Zealand consumers want to know that a business treats its workers fairly, and that now the settings are not helping them to make that decision. Some of our key trading partners are already taking steps to address modern slavery, including Australia, the UK, the US, France and Germany.
[slide changes to the objective of the proposals]
So going to the crux of the proposal, the main objective is to reduce modern slavery and worker exploitation in New Zealand supply chains and operations, helping to make practices based on fairness, and respect an ordinary part of doing business in New Zealand. Alongside this objective, the proposal aims to enhance New Zealand's international reputation as a country that supports human rights and transparency, strengthen New Zealand's international brand and make it easier for our businesses to continue to trade for the with the world, support consumers to make more informed choices in relation to modern slavery and worker exploitation risks associated with the goods and services that they consume. And to level the playing field for entities which are acting responsibly across the operations and supply chains.
[slide changes to key facts about modern slavery]
So, a little bit about modern slavery and how it relates to New Zealand. So, we're considering modern slavery as the severe exploitation that a person cannot leave due to threats, violence or deception. It includes forced labor, debt bondage, forced marriage, slavery and human trafficking. This proposal is focused on the more workplace side of modern slavery. The International Labor Organisation estimates that there are 40 million victims of modern slavery around the world, and that woman and girls account for 71% of those victims. Here in New Zealand, while it can be hard to get an accurate picture of the full scale of the issue, because it's a hidden crime, Walk Free is estimated that there are about 3,000 victims in New Zealand or in conditions of modern slavery. Worldvision has estimated that the average New Zealand household is spending about $34 a week on industries whose products are implicated in modern slavery. You may have recently heard about Joseph Matamata, who was sentenced to 11 years in jail for 10 charges of human trafficking, and 13 of dealing in slaves. This involved children and young adults. Most of the 51 trafficking victims identified to date in New Zealand have been migrant men who were trafficked for the purpose of labor exploitation, but we expect that the problem is more widespread.
[slide changes to a case study of Italian tomatoes, outlining key facts]
As an example of modern slavery in New Zealand's international supply chains, we can look to the UN, United Nations Special Rapporteur investigation, which found about 100,000 workers in Italy's agricultural sector may be suffering from severe exploitation, working up to 17-hour days with no rest or leave, where they're exposed to pesticides and conducting hazardous work. There was also evidence of physical and sexual violence or threats of violence, withholding wages, and documents and threats against their families. Workers often did not have valid work visas, and this was used by gang masters to control them and exploit them. It's possible that many of the tomato products in our supermarkets are linked to these practices.
[slide changes to key facts about worker exploitation]
Looking at the other side of this proposal, about worker exploitation in this proposal, we're referring to work exploitation as non-minor breaches of employment standards in New Zealand. The focus is on situations where a third party is contributing to conditions of exploitation through their business practices, not through that direct employer employee relationship. A survey of temporary migrants in New Zealand found that 11% felt threatened by their employers behavior, had their employer hold back or threatened to hold back their entitlements, or had been asked to pay money to their employer to get or keep their job. I will now pass over to John, who will talk about examples of worker exploitation in New Zealand.
[the next speaker is John To, advisor at MBIE. The slide changes to show recent media cases of modern slavery and worker exploitation in NZ]
John: Thanks, Shay. We find businesses across New Zealand with non compliant employment agreements, who make unlawful wages deductions, who seek premiums from their workers for employment. And these cases occur across many sectors including construction, cleaning, dairy, hospitality, and horticulture, just to name a few. Retail liquor is an industry that has been in the spotlight over the past few years. And I'll highlight a number of cases. An investigation of two super liquor stores owned by husband and wife Parmjeet Parihar and Kuldip Parihar, trading as a partnership, so the employment court ordered employers to pay a record $200,000 in penalties for serious employment breaches. In another case, Employment Relations Authority ordered Preeminent Enterprise limited trading as Brews Liquor Waimauku to pay penalties of $25,000 for employment breaches at to Auckland stores. And then final case in December 2020, the Employment Relations Authority ordered Nekita Enterprises to pay a combined total of $125,000 in penalties for operating a dual payroll system to avoid paying four employees the minimum wage for all hours they worked and failing to keep accurate employment records for 59 employees. The prevalence of exploitation across the industry suggests there is problems with the wider business models. The majority of the industry operates with franchise or franchise like models. They did not have systems in place to oversee and monitor treatment of workers across their branded stores or businesses. Since these breaches, it's been encouraging to see some industry leaders take a stand against exploitation taking proactive steps to lift employment law compliance. For example, Super Liquor exited the stores run by Nekita Enterprises from their franchise and have taken comprehensive steps to ensure there is no excuse for franchisees not to meet their obligations. However, there remains a number of operators in that industry, who have limited, to no systems to assure the fair treatment of workers across their model, and have made no efforts to do so. In recognition of this, we're currently taking steps to address exploitation in New Zealand.
[The next speaker is Shay Duckworth and the slide changes to show the cover of the recent Combatting Modern Forms of Slavery Action Plan]
Shay: Thanks, John. So I'll just talk a little bit about what we're currently doing. So, the government has put out an all of government plan of action against forced labor people trafficking and slavery, which is the basis for this proposal today but already, there are steps taken under that plan of action. We are working internationally, including through bilateral relations free trade agreements, to build best practice and cooperation, and we are improving government procurement measures. The government has also committed to combat all forms of temporary migrant worker exploitation, supported by $50 million over four years. This has included a new visa to support migrants to leave exploitative situations quickly, and remain lawfully in New Zealand, and a new dedicated 0800 number, and webform to make it easier for to report migrant worker exploitation. However, there is still a gap in our measures to address exploitation in supply chains and operations. And I'll pass over to Paramita, now, who will detail how the proposal has been designed to fix that gap.
[The next speaker is Paramita Turner, and the slide changes to different examples of responsibilities for different sized organisations]
Paramita: Thank you Shay. So we're now proposing a set of graduated responsibilities that would apply to every organisation in New Zealand. While they're based on the United Nations guiding principles on business and human rights, these responsibilities would apply to businesses, charitable entities, central and local governments, Incorporated societies and so on. Generally speaking, we're proposing that organisations with higher revenue would have more responsibilities. We want to hear from you on what those thresholds should be but we're currently proposing that medium be defined as having $20 million in annual revenue, and largest having $50 million in annual revenue. And just to note in terms of scope, that these responsibilities will apply to both domestic and international operations and supply chains. Internationally, the scope will be limited to modern slavery, whereas in New Zealand, the scope will also include worker exploitation, which as Shay mentioned earlier, we're defining as non minor breaches of New Zealand's Employment Standards.
[slide changes to examples of different actions to take if slavey or exploitation is found]
So to get into the responsibilities, all organisations would have a responsibility to take reasonable and proportionate action if they became aware of modern slavery or worker exploitation in their operations or supply chains. This would be a reactive responsibility, it would not require organisations to proactively look for modern slavery or worker exploitation in their supply chains. The reactive nature of this responsibility is intended to reflect the more smaller capacity of smaller organizations to undertake due diligence, while also recognising the importance of taking action if exploitation is found. In cases where an organisation does become aware of exploitation in their supply chain, we want to know from you what a reasonable and proportionate action could look like. But our current thinking is that taking action could involve the organisation, working with their supplier to address the harm, reporting the case to the appropriate authority, and or changing suppliers. We also think that's determining whether an action is reasonable and proportionate, could depend on a few factors, such as the organisation's size and resources, the nature of the control or influence the organisation has over its supplier, and the degree and type of harm that could result if no action is taken. So for example, there could be a greater expectation on larger entities to work with their suppliers before deciding to change suppliers. The intention here is for organisations to take a victim centric, as well as a risk based approach to determining the action that they take.
[slide changes to show examples of disclosure statements]
So medium and large organisations would have a responsibility to publish an annual disclosure statement. The approach here would be similar to the Australian legislation introduced in 2018, which requires organisations to publish annual modern slavery statements based around specified mandatory reporting criteria. We're proposing a similar approach, and we want to hear what you think the reporting criteria should include, but in line with the Australian model, our current thinking is that organisations would have to provide information on any risks identified of modern slavery and worker exploitation intheir supply and their operations and supply chains on the actions you've taken to assess and address those risks, including any due diligence and remediation processes, and how they assess the effectiveness of the actions they have taken.
[slide changes to show examples of due diligence]
Moving on to due diligence, so larger organisations and all other organisations with contractual control over New Zealand employers would have a responsibility to undertake due diligence. And just to note here that we're defining due diligence broadly and in a way that's consistent with the United Nations guiding principles for business and human rights. Effectively, this responsibility would require organisations to take three steps to identify and assess the risks of modern slavery and worker exploitation in their operations and supply chains, which includes mapping how the risks are spread across their supply chains, putting reasonable and proportionate measures in place to mitigate the risk and evaluating the effectiveness of those measures. Again, we're seeking your feedback on what reasonable and proportionate measures could look like in this context. Indicatively, we think that examples of measures which could be taken include regularly surveying suppliers to assess competence with protecting human rights and employment standards, commissioning third party audits of suppliers, establishing mechanisms to enable people to report concerns directly to the entity, assessing potential supply chain partners for the value alignments in terms of worker rights and wellbeing, and educating suppliers and workers in the supply chain, about relevant rights and obligations. So there's a wide range of potential measures and we have further examples in the full discussion document. However, as I mentioned, we're keen to hear your perspective on what reasonable and proportionate could look like for you. I'll now pass you over to John to discuss an example where exploitation was found in New Zealand and then the due diligence measures that were introduced to prevent it from occurring again.
[The next speaker is John To from MBIE. The slide changes to show recent media cases of worker exploitation in NZ]
John: The case you may have heard of is the chorus ultra fast broadband rollout. This was a national infrastructure project, with $2 billion in Crown funding. The media was the first to raise allegations of worker exploitation and Chorus responded by making public assurances that any employment breaches involving their contractors were isolated cases. However, a joint Labor Inspectorate and Immigration New Zealand and Inland Revenue investigation found systematic failures. We found potential employment standards breaches in 73 out of the 75 employers were initially investigated. Not just technical issues, the breaches include workers being paid below the minimum wage, and some workers on extended trial and training periods were getting no pay at all. Following our investigation, Chorus engaged Martin Jenkins to undertake a review of their business model. They also investigated the rest of their supply chain. This ended in Chorus implementing a worker welfare assurance system. It includes mapping their supply chain, identifying suppliers with high risk of poor employment standards, a whistleblower line, and a worker welfare portal that provides information education in multiple languages. They also educated their subcontractors to employment rights and responsibilities. They raised awareness of the migrant exploitation. They reported real value in doing road shows around the country. And they got into the field to see their people and hear firsthand what was going on. If you haven't read them, I recommend the review report and Chorus' response and they're both publicly available and provide lessons learned relevant to all businesses, whether subcontracted supply chain, I'll pass back to Paramita to explain the remainder of what we're seeking feedback on.
[The next speaker is Paramita Turner, and the slide changes to examples of enforcement and remediation]
Paramita: Thanks, John. So while the focus of the consultation is largely on the proposed responsibilities, we also want to explore options for enforcement and supporting mechanisms. These mechanisms will be vital for the effective implementation of the legislation. So as part of this, we're seeking your feedback on what penalties should apply and on how remediation could work as part of this legislation. The international experience has shown that enforcement powers and penalties are integral to driving change. Evidence suggests that there have been relatively high rates of non compliance where more flexible approaches have been adopted overseas. We also think that remediation plays an important role as part of the victim centric model. Again, The United Nations guiding principles on business and human rights recommend that businesses should remedy any harms that they have caused or contributed to. We're interested in your views regarding whether organisations should be required to remedy harms, where there's a clear link between their actions and the harm, and we're interested in how this could be reflected in the legislation.
[slide changes to examples of support mechanisms]
So on support mechanisms, we want your feedback on what support mechanisms are needed and how they should be designed to provide the greatest value. A central register for disclosure statements could provide a centralised point of contact for organisations to lodge their statements, and for the public to view those statements. For example, Australia has a central repository for modern slavery statements, which currently contains over 4000 statements relating to over 8000 reporting entities, and when I checked last night, there'd been almost 900,000 searches of the register to date. We also recognise that good support and guidance and toolkits will be important for organisations. There are a range of ways that that could be provided, such as through published documents, online modules, templates, and other resources. So we want to hear what would be of greatest value to you. And finally, we also understand that internationally, independent bodies, such as the UK anti slavery Commissioner, have played important roles in raising awareness and promoting best practice in identifying, supporting and advocating on behalf of victims, and independently reviewing the effectiveness of the modern slavery legislation. Their independence can also allow them to bring different parties together in a way that allows for collaborative and constructive dialogue. So as a final item, we also want to hear your views on the potential roles and functions of an independent body. So in terms of next steps, we're seeking feedback on the proposals by the seventh of June. And you can provide your feedback to us in writing or by completing an online survey. Further information is available on the MBIE website at MBIE.govt.nz/modern-slavery. And your feedback will inform the final options considered by Cabinet.
[slide changes to show Next Steps, including consultation closing period, where to go for more information and feedback]
Just to note that these will be developed in terms of the process from there, these will be developed into draft legislation, which would then be considered by Parliament.
[slide changes to final slide saying ‘thank you’]
So that wraps up the presentation. Thank you for listening. We'll move on to questions and answers. So as Nita mentioned at the beginning, if you do have any questions, please use the q&a function at the bottom of the of the screen.
[the next presenter is Shay Duckworth]
Shay: So I can see a question here around identifying risk and supply chain, and how many steps of the supply chain would need to be mapped? That's a really good question and, and one that we're seeking further details on. So there's a couple of options, the focus should be at least on mapping the direct suppliers. But for the proposal to be having had the most impact, then it would need to go further into the supply chain. We're interested to hear more about the efforts and resources required to go further into the supply chain, and whether you think that the steps taken when you go further into supply chain should be as rigorous as those taken with direct suppliers.
[the next speaker is Paramita Turner]
Paramita: And so there's another question here on what category would franchise businesses come into. Perhaps it's worth sort of expanding on the response of the second responsibility on entities with control over New Zealand employers. So, as I mentioned before, the sort of categories that we have all organisations, organisations with $20 million or more in revenue and organisations with $50 million or more in revenue, and in terms of the due diligence responsibilities, they apply, where the organisation is either $50 million or more in revenue, or where they have control over a New Zealand employer. And so potentially for some franchising businesses, but also potentially other contracting arrangements, they could fall under that category of New Zealand organisations that have control over other New Zealand entities. The way that we've defined it as control means that you are either the entity's parents or holding company or you have significant contractual control, whether direct or indirect over the entities affairs, which includes corporate operational or employment matters. In the full discussion document, we've also provided some examples of what that could look like, and also, some sorts of practical examples of some case studies where it could apply, so that's on page 54 of the full discussion document.
[the next speaker is Shay Duckworth]
Shay: I've got another question here around funds from New Zealand that support modern slavery overseas. So the question is, the legislation as proposed appears to focus on supply of goods to New Zealand businesses and organisations. Can you explain why the New Zealand legislation does not target funds from New Zealand. Like the Australian legislation does? So there's two parts to that. The first would be that direct contributions to slavery from New Zealand are currently already penalized under our criminal system. So, if you're directly involved in slavery, that's already a crime. The second part of that is that this proposal is focused on operations as well as supply chains. And if an organisation's objectives involve funding, trafficking overseas, that would fall within the scope of this legislation. If you think that we've missed anything out there, we'd love to hear that from you.
[the next speaker is Paramita Turner]
Paramita: I might respond to this question on, 'can you please re explain the difference between international and New Zealand.' So internationally that focus is on modern slavery and New Zealand, the focus is on worker exploitation and modern slavery. So what that means in terms of disclosures, for example, is responsibility is to disclose the steps you're taking those steps would be in relation to addressing worker exploitation in your domestic supply chains, and then modern slavery in your international supply chains. And in relation to due diligence, with due diligence the obligations would apply in relation to protecting workers against worker exploitation within New Zealand, as well as modern slavery within New Zealand, but would be focused only on modern slavery internationally. Hopefully, that clarifies it.
[the next presenter is Shay Duckworth]
Shay: I've got another question here about the definition of worker exploitation. And the concern is that half of all SMEs could be found to be in non-minor breach of employment legislation without staff in reality being exploited, what comfort can you provide on that concern? So this proposal is focused on third parties contributing to worker exploitation rather than the direct relationship between an employer and an employee. The responsibility would be, if worker exploitation was found, then a company or organisation which is say the franchisor, the franchisor would have to take steps to ensure that that worker exploitation does not continue. So that's the main point. So on the due diligence side of things. It's more about identifying areas of risk. So if there are obvious risks of ongoing worker exploitation, then organisations further up the supply chain, would have to take measures to address that on an ongoing basis. So it's not about those smaller one off ones that are hard to identify. It's about ongoing issues.
[the next speaker is Paramita Turner]
Paramita: Yeah, so I was just looking at the next, another question on things that would need to be reported under the reporting responsibility, and how they appear very similar to the obligations for due diligence. And can you outline the differences between the disclosure and the due diligence more specifically? So it's correct that the due diligence responsibilities do appear very similar to their reporting responsibilities. The difference is that the disclosures would apply to entities with over $20 million in revenue, whereas the sort of more firmer, action oriented due diligence would apply to entities with over $50 million in revenue. And the intention is very much that effectively the disclosure is reporting on the due diligence that's undertaken without necessarily the same expectation around the taking those actions and the intent, just to reflect more broadly on the overall approach with this, the intent is to promote an environment where thinking about social sustainability and your supply chains is sort of integrated into the way that business is done, and that organisations operate. So the responsibilities become a bit firmer as the organization grows. So it starts off with a reactive obligation that applies to all organisations, as they increase to larger organisations of $20 million revenue, there's the disclosure. And then as we move into $50 million, there's the firmer obligation, where, where there's the requirements to take corrective action.
[the next presenter is Shay Duckworth]
Shay: We've got a question here around recognizing modern slavery statements from other jurisdictions like Australia and the UK. So as Paramita mentioned earlier, the criteria that we have suggested, are drawn from the Australian modern slavery legislation. Where possible, we would like to minimise costs for businesses and other organisations so that they can draw on the work that they're already doing. If the legislation ends up having similar characteristics to Australia, and can have the same effect, and that might make it possible for organisations to reuse parts of their statements from other countries.
[the next speaker is Paramita Turner]
Paramita: There's a question on 'can you speak to any contemplated penalties that non-compliant entities would face?' So I think the international experience suggests that there need to be some penalties for non-compliance. We're looking at financial penalties, not criminal penalties at the moment. But in terms of what the level of those penalties could be, we don't have a proposal for that. In the discussion document with suggested some examples of similar legislation that we could draw from. But it's something that we're keen to hear through the public consultation as well. We're conscious of getting a balance between, you know, wanting to encourage good practices, but also not wanting to allow complete non-compliance as well.
[the next presenter is Shay Duckworth]
Shay: There's a question here around how many SMEs import from at risk regions or at risk commodities, and how many would be below the intended threshold of $20 million. So to start with that threshold is lower than the Australian threshold of $100 million of Australian dollars. And that is partially to reflect that New Zealand businesses start importing and exporting at a much earlier phase in their development, our businesses are generally a bit smaller. And so the number that is captured within that 20 million threshold is around 2000 businesses, potentially. And we've set that threshold to try and balance those considerations of capacity to take action against the potential impact of taking action. So those ones who are over that threshold are likely to have more of an impact. A lot of the smaller ones may not be directly importing. But we'd like to hear more from you about whether that threshold is set at the right level.
[the next speaker is Paramita Turner]
Paramita: And a question here on 'will third party audit guidelines be prescriptive.' So at the stage where the sort of level of the proposal is sort of the undertaking of due diligence, we haven't prescribed specific measures, or proposed specific measures to be introduced in the legislation such as requiring audit guidelines, there may be something that the regulator in future provides more guidance on. But we're also interested in your views on what that could look like and what taking it as part of what measures could be reasonable and proportionate, and how the legislation could be designed.
[the next presenter is Shay Duckworth]
Shay: There's another question around disclosure statements and whether companies would be required to make their supply chain records available to the public or just to MBIE. So that second responsibility to make an annual disclosure of the steps you're taking to address modern slavery and worker exploitation. That's quite focused on risks identified rather than necessarily general supply chain records but also, for that to be effective, those risks would have to be made public. And that would then help consumers to make choices about the goods and services that they buy, and whether the company has got responsible practices in place. So if they, if they were just to MBIE, then they wouldn't be as effective in driving that wider cultural change.
[the next speaker is Paramita Turner]
Paramita: Question under 'current New Zealand employment legislation, there's no limit on working hours per week was any consideration given to this and when exploitation is triggered?' So the way that we've defined worker exploitation is based on employment standards and non minor breaches of employment standards. Where working hours could become an issue as it may be symptomatic of wider problems, that could mean that we have a situation that is modern slavery. So working hours in and of themselves may not necessarily mean that a person is in modern slavery, but it's certainly an indicator. But otherwise, when we're looking at worker exploitation at this stage, it is those non minor breaches of employment standards.
[the next speaker is Paramita Turner]
Paramita: Shall I respond to this question on 'do we have a good understanding of the gender breakdown of exploited workers in the New Zealand context?' So it's a good question. So we've, so just looking at the modern slavery side of things, we've identified around 50 victims of trafficking, over the past 10 or so 15 years, I think. In terms of those victims, most of them have been migrant men who were trafficked into New Zealand for the purpose of forced labor. However, our thinking is that given international trends and knowing about risk and vulnerability, that likely doesn't reflect the real nature of modern slavery in New Zealand. We think that it's likely that there would be more women who are being exploited in New Zealand. But again, that is, it is a difficult issue. And it is a very hidden problem. And so we don't have a, I guess, a precise understanding of what the sort of demographic breakdown looks like.
[the next presenter is Shay Duckworth]
Shay: So I've got a question here, 'what requirements would an entity need to display when making a disclosure statement? Action that are measurable rather than just words.' So there's three parts in disclosure statements, the first would be identifying those risks in the supply chain and operations, and then saying what measures the entity has put in place to address those risks, but then also assessing whether those measures have worked and saying publicly whether you think you've done enough to address those measures. So in a way that provides a measurable action over time.
[the next speaker is Paramita Turner]
Paramita: This question on 'what have you assessed us for compliance costs to business?' So, as I mentioned before, we're seeking feedback from the public on what the specific actions should be. And so the cost to businesses will very much depend on where that lands. But one thing we are mindful of is the need for meaningful action but balanced against sort of undue compliance cost. The other thing that we're mindful of is for businesses that have good practices in place already, the intent is not to sort of add unnecessary business cost to them. So that's one of the biggest one of the key considerations that we have going forward as we develop, as we develop these measures.
[the next presenter is Shay Duckworth]
Shay: I've got a question here around reporting requirements. So 'there are certain there's certainly been criticism of modern slavery reporting requirements will companies be fined for not reporting poor or inadequate reporting?' Yes, so the proposal would potentially include financial penalties for failing to meet requirements, those requirements could include making the statement but then also meeting the criteria of the that statement. And so if you don't include the assessment of the risks and information about the steps that you've taken, potentially there could be a fine for that as well. We'd like to hear more about what sort of financial penalties would be appropriate, and in which circumstances.
[the next speaker is Paramita Turner]
Paramita: It's kind of a comment and potential question. So the major issue we find is that migrant employers do not comply due to complexity, and for lack of business systems, it's proven to make it harder in investigations. And we seek to work with MBIE on the other program to get the certificate of compliance. So just to comment on that. So one of the things that we're looking for feedback on is what support would be of greatest value. So for instance, a certificate of compliance, and we're also interested in what would be of greatest value to specific stakeholders, so migrants employers, for instance. So that's that kind of feedback is really useful.
[the next presenter is Shay Duckworth]
Shay: So there's a question here around auditing, 'how would legislation interact with or recognize existing international supply chain audit requirements businesses undertake for export goods.' So where an organisation is undertaking third party auditing to ensure that their supply chain is free from exploitation, that could be one way that they're mitigating the risks of exploitation. And that would be relevant to their both due diligence and their disclosure statement. So steps that organisations are already taking will definitely be relevant going forward and will be part of meeting requirements. However, if that third party audit is not of a standard that's enough to address those risks, then it might not be enough to meet the legislative requirements.
[the next speaker is Paramita Turner]
Paramita: We have a question on franchising and what if the control of the franchisee is not about franchisees and employment relationships. And I think just to expand on that, you could apply that to contracting situations. So what if the contractual control speaking more generally does not include control over the employment relationships, they may still be considered to have control over the New Zealand employer. I think probably the easiest thing would be to refer you to page 54 of the full discussion document which sort of highlights the range of circumstances where an entity could be considered to have control so that it could include situations where for instance, they grant the entity a right to operate a business supplying goods or services using the entity's brand, and has control over things such as the purchase of certain products, the ability to sell certain products, the use of specified equipments, control over the location and site and territory and so on. And then there's some practical examples on that page as well.
[the next presenter is Shay Duckworth]
Shay: So there’s a question here 'will obligations applied both ways in a supply chain? For example, if an organisation has reason to believe a customer or client may be involved in modern slavery practices'. So this is mainly focused on entities up the supply chain rather than further down. So their purchasing practices where they can determine what their suppliers are doing through their, basically, their expenditure. The further, in terms of the goods that they're selling, they don't have as much control, in terms of their clients practices. But if the client is part of their overall operation, say a franchisee or they have an investment in the client, then there could potentially be obligations under the operation side of the proposal. And hopefully, by making more public some of the steps that organisations are taking, what organisations are selling on will be able to see what their clients are doing. And they can help use that to make decisions as well.
[the next speaker is Paramita Turner]
Paramita: So 'can you give an indication of timelines for reviewing, for implementing the new requirements, once legislation comes into effect? And will there be a transition period to allow businesses time to establish new processes, if not already established.' So one thing that we're also seeking feedback on which I didn't mentioned in the presentation, but that we are seeking specific feedback on is a phase-in period. So we do recognise that supply chains are under pressure at the moment. And that even if legislation was introduced, in some years away, there may still be a need to allow for phasing in of, of different elements. So the phase in could work in different ways it could mean for instance, that the full set of responsibilities apply to larger organisations to begin with, and then apply to smaller ones over time. It could mean, for instance, that different types of responsibilities come in at different periods. So we're seeking feedback on that.
[the next presenter is Shay Duckworth]
Shay: Question here around if it's taken overseas, and how New Zealand works with foreign governments. So 'one of the key challenges with cross border goods transparency is reluctance of foreign governments to support your diligent efforts, like multilateral support, will New Zealand government provide businesses so they can meet the new obligations?' And so we are already working closely with our partners overseas, through forums like the Bali process and the International Labor Organisation to help promote best practice. And this proposal will also be joining a lot of the steps that other governments are taking to put in place due diligence measures. So we're seeing a movement in the EU, towards mandatory due diligence. So France has had measures in place since 2017. Germany put in place new measures last year, Norway's put in permanent placement measures last year, so we're seeing a trend towards due diligence. And as more countries move on this issue, it will hopefully become a stronger effort, and we will be able to work together to reduce modern slavery and worker exploitation together.
[the next speaker is Paramita Turner]
Paramita: Question on, 'will disclosure statements be reviewed and approved before being published, like the Australian legislation, if so, who would do this?' So we're proposing that the responsibility for disclosure at this stage, we've suggested that it should be aligned with Australian unless there's good reason not to. So in terms of who needs to review and approve it, that could be the governing body of the entity such as a company's board of directors. I believe that's what you're referring to in terms of who's reviewing and approving? I think the regulator, as far as I'm aware, doesn't have a role of reviewing and approving, but they may have a role in assessing whether or not the disclosure has met the criteria and has responded to the criteria.
[the next presenter is Shay Duckworth]
Shay: So I'll answer one last question, this question is 'where can businesses go if anywhere for advice on managing due diligence and working with international suppliers on these issues?' So firstly, MBIE has some great advice on our website around the steps that businesses can take for ethical supply chains. There are links to those resources on our consultation page. Also, New Zealand Trade and Enterprise work closely with their businesses too, on these issues. And then more widely there's a lot of international resources and best practice information available, particularly from the OECD and the UN guiding principles for businesses, which this proposal is based on. So thank you for all your questions. I'll pass back to Nita for our closing karakia.
[the final speaker is Nita Zoedgkar]
Nita: Yes, thanks again, for all your really good questions. And thanks to both Shay and Paramita, for answering them so well and thoroughly. We've heard about the proposals, and we've heard about the importance of this work. And we all collectively have a big job ahead of us to further develop the proposals but also raise awareness of the consultation in the first instancem, so I really encourage you to make a submission, fill out the survey and promote the consultation across your networks.
[screen showing slideshow with MBIE’s closing Karakia]
We'll close with our MBIE Karakia. Just bring that up now. Ka hiki te tapu Kia wātea ai te ara Kia turuki ai te ao mārama Hui ē, Tāiki ē. Thanks again and we really look forward to receiving your feedback on the proposal. Ka kita āno.
讨论文件摘要: 对现代奴隶制和劳工剥削的立法回应 | Chinese (simplified) [PDF 479KB]